TransUnion headed to trial over government watch list alerts
Dena Aubin
(Reuters) – Credit bureau TransUnion will try to convince a jury next month that it took reasonable steps to check the accuracy of its reports as it defends itself against accusations that it wrongly tagged consumers as being on a federal list of security threats.
In a trial brief filed on Thursday in San Francisco federal court, lawyers for TransUnion said plaintiffs suing the credit bureau have no evidence that it violated anyone’s rights or acted recklessly.
Filed in 2012, the class action accuses TransUnion of wrongly reporting that consumers were on a list of terrorists, drug traffickers and other security threats maintained by the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC).
Companies and individuals are prohibited by OFAC rules from doing business with anyone on the list, with steep penalties for violations, and TransUnion provides OFAC alerts to lenders as a service to help them comply.
The lawsuit said many consumers were wrongly tagged as being on the blacklist because TransUnion reported an OFAC red flag when a name partially matched a name on the government’s list.
A spokesman for TransUnion and lawyers for the plaintiffs could not immediately be reached for comment. Trial is set for June 12 in the case, brought on behalf of thousands of consumers nationwide.
The case is believed to be the first major class action to go to trial against a credit bureau over OFAC alerts. The other two major credit bureaus, Experian and Equifax, also offer OFAC screening for their customers, although they have not faced class actions over their practices.
The named plaintiff in the TransUnion lawsuit, Sergio Ramirez of Fremont, California, said he was denied an auto loan in 2011 after the dealer ordered a credit report from TransUnion and saw a notation that he may be on the government’s blacklist.
When Ramirez contacted TransUnion and asked for a copy of his credit report, the OFAC alert was not on it, his lawsuit said.
Plaintiffs accused TransUnion of violating the U.S. Fair Credit Reporting Act, which requires credit bureaus to take reasonable steps to assure their reports are accurate.
TransUnion also violated the act by not including OFAC alerts in copies of reports requested by consumers, plaintiffs alleged. Plaintiffs seek punitive damages to be determined at trial.
In its trial brief, TransUnion said in 2011, when the alleged conduct occurred, the company knew of no technology that could have achieved greater accuracy than the screening process it used.
TransUnion’s OFAC alerts also stated that the individual was only a potential match to the government’s list, alerting users that further review was needed, the credit bureau’s lawyers said.
In their own brief, lawyers for Ramirez said TransUnion’s procedures were inadequate because they screened only for a first and last name, or an approximation of those names, and did not check any other identifying information.
When a consumer requested a copy of his credit report, TransUnion sent information about the OFAC alert in a separate letter, saying it was being provided as a courtesy. At best that created an ambiguity about whether that information was in the consumer’s report, plaintiffs said.
The case is Sergio Ramirez v. TransUnion, U.S. District Court, Northern District of California, No. 12-0632.
For the plaintiffs: Andrew Ogilvie at Anderson Ogilvie & Brewer and James Francis and John Soumilas at Francis & Mailman
For the defendant: Julia Strickland and Stephen Newman at Stroock Stroock & Lavan and Bruce Luckman at Sherman Silverstein Kohl Rose & Podolsky
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Company: EQUIFAX INC; EXPERIAN PLC; TRANSUNION
News Subject: (Business Lawsuits & Settlements (1BU19); Class Actions (1CL03); Consumer Protection (1CO43); Judicial Cases & Rulings (1JU36); Legal (1LE33); Liability (1LI55))
Industry: (Banking (1BA20); Credit (1CR60); Financial Services (1FI37); Retail Banking Services (1RE38))
Region: (Americas (1AM92); California (1CA98); North America (1NO39); U.S. West Region (1WE46); USA (1US73))
Language: EN
Other Indexing: (John Soumilas; Bruce Luckman; Julia Strickland; James Francis; Stephen Newman; Andrew Ogilvie; Sergio Ramirez)
Keywords: banking; fedlit (MCC:OVR); (MCCL:OVR); (N2:USA); (N2:AMERS); (N2:NAMER); (N2:US)